On May 12, Muyuan received an annual report inquiry letter issued by the Shenzhen Stock Exchange. According to the inquiry letter, at the end of 2023, the balance of monetary funds of Muyuan shares was 19.4 billion yuan, short-term borrowings were 46.929 billion yuan, an increase of 60.91% year-on-year, and the amount of non-current liabilities due within one year was 8.65 billion yuan, and the amount of monetary funds and long-term and short-term borrowings was higher at the same time.
Source: Photo.com
Muyuan shares will lose 4 billion yuan in 2023
Muyuan Co., Ltd. (002714. SZ) currently has a total of 308 subsidiary/grandchild companies, the main business is pig breeding and sales, pig slaughtering, the main products are commercial pigs, piglets, breeding pigs and pork products such as white strips and segmented products.
From 2020 to 2022, the operating income of Muyuan Co., Ltd. will be 56.277 billion yuan, 78.890 billion yuan, and 124.826 billion yuan respectively, the net profit attributable to the parent company will be 27.451 billion yuan, 6.904 billion yuan, and 13.266 billion yuan respectively, and the net profit after deducting non-profits will be 27.327 billion yuan, 6.785 billion yuan, and 13.029 billion yuan respectively.
On April 26, Muyuan disclosed its 2023 annual report. In 2023, Muyuan Co., Ltd. will sell 63.816 million live pigs, including 62.267 million commercial pigs (including a total of 13.266 million sales to its wholly-owned subsidiary Muyuan Meat Food Co., Ltd. and its subsidiaries), 1.367 million piglets, and 181,000 breeding pigs, and in 2023, Muyuan Co., Ltd. will slaughter 13.260 million pigs and sell 1.405 million tons of fresh and frozen pork products.
In 2023, the company will achieve operating income of 110.861 billion yuan, a decrease of 11.19% over the same period of last year, of which the slaughtering and meat business will achieve operating income of 21.862 billion yuan, an increase of 48.54% over the same period of last year; net profit -4.168 billion yuan, a year-on-year decrease of 127.91%; The net profit attributable to the parent company was -4.263 billion yuan, a year-on-year decrease of 132.14%. This is the first time that Muyuan shares have suffered a loss since its listing in 2014.
According to the first quarter report of 2024 disclosed by Muyuan shares on the same day, the company achieved operating income of 26.272 billion yuan in the first quarter of 2024, a year-on-year increase of 8.57%; net profit -2.459 billion yuan, down 104.81% year-on-year; The net profit attributable to the parent company was -2.379 billion yuan, a year-on-year decrease of 98.56%, and the increase in income was obvious.
The double high level of deposits and loans has attracted regulatory attention
In 2022, the Shenzhen Stock Exchange issued an annual report inquiry letter to Muyuan Co., Ltd. on issues such as monetary funds, bank credit, and liquidity risks. For the 2023 annual report, on May 12, 2024, Muyuan once again received an annual report inquiry letter issued by the Shenzhen Stock Exchange due to related matters.
According to the inquiry letter, in terms of debt, as of December 31, 2023, the asset-liability ratio of Muyuan shares was 62.11%, an increase of 7.75 percentage points from the end of the previous year, and the current liabilities were 94.659 billion yuan, of which the amount of non-current liabilities due within one year was 8.651 billion yuan, and the short-term borrowings were 46.929 billion yuan, an increase of 60.91% year-on-year; current assets were 63.583 billion yuan, lower than current liabilities of 31.076 billion yuan, and the quick ratio was 0.23, down 25.81% year-on-year; The EBITDA interest coverage ratio was 3.88, down 62.29% year-on-year.
In addition, as of the date of the annual report, Muyuan has extended the short-term loan of 12.433 billion yuan on December 31, 2023 to after December 31, 2024 by repaying the principal and renewing the loan.
In terms of monetary funds, at the end of 2023, the balance of monetary funds of Muyuan shares will be 19.429 billion yuan, of which the restricted monetary funds are mainly bank acceptance bill margins, loan margins, futures margins, letter of credit deposits, etc., with an amount of 5.653 billion yuan.
The Shenzhen Stock Exchange requires Muyuan to explain the reasons and reasonableness of holding monetary funds and long-term and short-term borrowings at the same time in combination with working capital needs and operating cash flow; At the same time, it explains the debt repayment plan, funding sources and financing arrangements for the liabilities due within one year, and explains whether there is uncertainty in the repayment of the above debts when due, combined with the constraints on monetary funds.
Large-scale short-term debt may be used to expand production
From 2021 to 2023, the proportion of cash received from the sale of goods and labor services to operating income of Muyuan shares is 101.60%, 102.06% and 101.95% respectively, and the proportion of net cash flow generated by operating activities to net profit from 2021 to 2022 is 213.33% and 154.09% respectively, and Muyuan shares will lose money in 2023, but the net cash flow generated by operating activities will also reach 9.893 billion yuan.
From 2021 to 2023, the accounts receivable turnover rates of Muyuan shares are 1018.31 times, 799.80 times, and 643.74 times, respectively, while the average values of the pig breeding industry (excluding Muyuan shares) are 108.51 times, 119.25 times, and 116.96 times, respectively.
According to the record of investor relations activities disclosed by Muyuan on May 11, the company's overall credit line is currently more than 95 billion yuan, and the credit of head banks accounts for more than 70%, and the structure of cooperative banks has improved significantly compared with the past. The current unused credit limit of Muyuan shares is about 30 billion, which can meet the capital needs of production and operation, and the cost of existing loans continues to decline, and the cost of new bank loans is basically below 4%.
According to this calculation, the current bank borrowings of Muyuan Co., Ltd. have reached about 65 billion yuan, and the company's long-term and short-term borrowings will total 56.792 billion yuan by the end of 2023, and the bank borrowings of Muyuan Co., Ltd. may have increased by about 14.45%.
Muyuan's cash collection ability is "outstanding", why does the company need a huge amount of bank loans at the same time?
According to the cash flow statement, since 2020, most of the cash inflow from Muyuan's financing activities has come from borrowings; And since its listing, the net cash flow generated by Muyuan's investment activities has continued to be negative, with -45.353 billion yuan, -35.968 billion yuan, -15.929 billion yuan, and -17.219 billion yuan respectively from 2020 to 2023, and the funds are mainly used for the construction of fixed assets.
From 2020 to 2023, the amount of fixed assets transferred from projects under construction to fixed assets will be 38.770 billion yuan, 44.364 billion yuan, 15.874 billion yuan and 16.554 billion yuan respectively, and the project mainly includes the construction of breeding farms and slaughterhouses for expanding production capacity.
As of the end of 2023, Muyuan Co., Ltd. has a breeding capacity of about 80 million heads/year; A total of 10 slaughterhouses have been put into operation, with a slaughtering capacity of 29 million heads/year; At the same time, Muyuan has set up 26 slaughtering subsidiaries across the country, and all slaughtered pigs come from the company's own farms; The slaughtering and meat business has set up more than 60 service stations in 20 provincial-level administrative regions across the country.
In addition, the annual report shows that in 2023, the capacity utilization rate of the breeding business will be about 79.77%, and the capacity utilization rate of the slaughtering meat business will only be about 46%.
At the end of the first quarter of 2024, Muyuan Co., Ltd. obtained short-term borrowings of 50.8 billion yuan and long-term borrowings of 10.442 billion yuan, the company's current ratio was 0.66, and the quick ratio was 0.26, and the two short-term debt repayment indicators were less than 1 for four consecutive years. According to the information recently disclosed by Muyuan shares, the company's road to substantial expansion may also be about to come to an end.
According to the record of investor relations activities disclosed by Muyuan shares on April 28, the company expects to spend about 10 billion yuan in 2024, of which 3 billion yuan will be used for maintenance and transformation, and the remaining part will be used for the settlement of completed projects.
At the same time, the company said that in the future, with the gradual completion of the company's production capacity construction, the annual capital expenditure will be mainly based on the maintenance and transformation of fixed assets in the current year, and the overall will be controlled at a low level. In the future, on the basis of stable operation, the company will gradually reduce the level of leverage and continue to optimize the financial structure.